Fuel tax credits: the basics for eligible businesses

How the credit works

The policy logic is straightforward: for a lot of business fuel use, that excise isn't meant to apply, so the fuel tax credit system hands back some or all of it after the fact. You claim it on your BAS, where it reduces what you owe or adds to your refund.

To claim, you need to be registered for GST and for fuel tax credits, and the fuel has to be used in carrying on your business. The claim itself is calculated from the quantity of eligible fuel and the rate that applied to each activity when the fuel was acquired.

What is generally eligible

• Fuel used in machinery and equipment: excavators, generators, compressors, pumps
• Fuel used in vehicles operating off public roads, farms, construction sites and mine sites included
• Fuel used in heavy vehicles travelling on public roads, where the credit gets reduced by a road user charge
• Auxiliary equipment on heavy vehicles, refrigeration units for example, which can attract a different rate to the fuel propelling the vehicle

The main exclusion worth remembering is light vehicles on public roads: the everyday ute or van driving between jobs generally earns no credit for that on-road travel. Vehicle weight determines what counts as heavy, and the ATO publishes the threshold, so check there or ask your agent before assuming a vehicle qualifies.

Rates change; do not hardcode them

Rates differ by fuel type and by activity, and they're adjusted regularly through the year. A spreadsheet built around last year's rate quietly produces wrong claims, every single time. The ATO's fuel tax credit calculator applies current rates and is the safest way to prepare each claim, particularly when a BAS period spans a rate change.

Records that support a claim

You need records of the fuel acquired, tax invoices and fuel card statements mainly, plus records showing how it was used: logbooks, job records, equipment run sheets. Like other tax records, these generally need keeping for five years. Fuel card providers make the acquisition side easy; the usage side is where discipline pays off, particularly for heavy vehicle operators splitting on-road and off-road kilometres.

Is it worth claiming

For businesses running significant machinery or heavy vehicles, the credits add up to real money, and skipping them is simply leaving margin on the table. For a business with one light vehicle and a lawn mower, the eligible litres are probably trivial, frankly. Never assessed it? A quick eligibility review against your fuel spend answers the question in minutes, and past periods can often be reviewed within the ATO's time limits for claiming.

Where NextEra fits

Fuel tax credits reward exactly what managed bookkeeping produces: clean fuel purchase records, a documented apportionment method, and claims calculated at current rates every BAS. NextEra builds this into the monthly rhythm for eligible clients, and the Strategic Finance Review is a good moment to check whether credits are being claimed correctly, or missed entirely.